Using An $8M Single-Stock Loan as an Alternative to Selling a Stock Position
26th July 2023
Key Details
- French National/Resident
- Net worth: £121 million +
- Shareholding in a French Listed company with a market cap of €200 million.
- Financing requirements: €8 Million
- Terms offered: 3-year term (24-month lock-in) at 3.50% interest per annum.
This was an exciting case whereby a shareholder held a very concentrated position in a single stock and wanted to diversify their portfolio. The client was unaware such a small/mid-cap listed company would be eligible for funding, hence was opting to reluctantly sell their position. The client had excellent private banking relations due to their wealth, but they were unable to provide a completely dry lending solution for them. We assisted the UHNWI in securing a single stock loan with no personal guarantee, secured on their holding of the French-listed stock for further investment opportunities.
The client was an entrepreneur, having built their wealth by investing in several start-ups. Their wealth was predominantly held in tech and real estate, another classic case of using a single stock loan to diversify your investment portfolio.
In this scenario, a Single Stock Loan is used to create liquidity to reinvest in other new investment opportunities that may offer better returns than the original shareholding. Entrepreneurs often want to take advantage of retaining any upside to any stock positions without the need to liquidate them by selling the position.
In this case, we offered a loan amount of €8.2 Million on a 3-year term at a rate of 3.50% pa. The client was also able to retain full voting rights and dividends under the structure of the loan. They also had the added advantage that should they decide to sell the position to repay the loan, the lender would be able to liquidate their position and return any balance of proceeds to them.
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